Opinion
IP 01-0100-C-T/K
December 14, 2001
B Steven J Halbert Attorney at Law, Indianapolis, IN.
B David J Philipps Gomolinski Philipps Ltd, IL.
Christopher E Clark Goodin Kraege Abernathy Miller, Indianapolis, IN.
Jonathan N Ledsky Varga Berger Ledsky Hayes Casey, IL.
Entry On Motion to Dismiss Plaintiff's Complaint
Though this Entry is a matter of public record and is being made available to the public on the court's web site, it is not intended for commercial publication either electronically or in paper form. The reason for this caveat is to avoid adding to the research burden faced by litigants and courts. Under the law of the case doctrine, the ruling or rulings in this Entry will govern the case presently before this court. See, e.g., Trs. of Pension, Welfare, Vacation Fringe Benefit Funds of IBEW Local 701 v. Pyramid Elec., 223 F.3d 459, 468 n. 4 (7th Cir. 2000); Avitia v. Metro. Club of Chicago, Inc., 49 F.3d 1219, 1227 (7th Cir. 1995). However, a district judge's decision has no precedential authority and, therefore, is not binding on other courts, on other judges in this district, or even on other cases before the same judge. See, e.g., Howard v. Wal-Mart Stores, Inc., 160 F.3d 358, 359 (7th Cir. 1998) ("a district court's decision does not have precedential authority"); Malabarba v. Chicago Tribune Co., 149 F.3d 690, 697 (7th Cir. 1998) ("district court opinions are of little or no authoritative value"); United States v. Articles of Drug Consisting of 203 Paper Bags, 818 F.2d 569, 571 (7th Cir. 1987) ("A single district court decision . . . has little precedential effect. It is not binding on the circuit, or even on other district judges in the same district."). Consequently, though this Entry correctly disposes of the legal issues addressed, this court does not consider the discussion to be sufficiently novel or instructive to justify commercial publication of the Entry or the subsequent citation of it in other proceedings.
Plaintiff, James A. Jackson, sues Defendant, Aman Collection Service, Inc., under the Fair Debt Collections Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. Defendant moves to dismiss Plaintiff's Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiff opposes the motion I. Legal Standard Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes dismissal of a complaint which fails "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the complaint, and may be granted only when the plaintiff can prove no set of facts entitling him to relief. See Marshall-Mosby v. Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000); In re HealthCare Compare Corp. Secs. Litig., 75 F.3d 276, 279 (7th Cir. 1996) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). When deciding a 12(b)(6) motion, the court assumes that all well-pleaded factual allegations in the complaint are true, views them in the light most favorable to the plaintiff and draws all reasonable inferences in the plaintiff's favor. Gomez v. Ill. State Bd. of Educ., 811 F.2d 1030, 1039 (7th Cir. 1987).
II. Alleged Facts
Defendant, Aman Collection Service, Inc. ("Aman"), attempted to collect a consumer debt allegedly owed by Plaintiff, James A. Jackson, to Norwest Financial. Aman regularly uses the mails to collect or attempt to collect consumer debts. Aman sent Mr. Jackson an initial form collection letter, dated 8/29/2000, demanding payment for:
$463.47 TOTAL DUE PLUS ACCRUING INTEREST
(Compl., Ex. A.) Mr. Jackson alleges that Aman violated the FDCPA, specifically 15 U.S.C. § 1692g(a)(1), which requires a statement of "the amount of the debt" because its letter did not state the entire amount it is attempting to collect, but rather, stated an amount due plus a non-specific amount of "accruing interest." (Compl. ¶ 6.) He seeks statutory damages, costs and a reasonable attorney's fee.
In addition to the language already quoted, Aman's collection letter also states BALANCE 463.47 (Id.) Neither party relies on this language in making its arguments for or against dismissal, and the court believes that at least at this stage of the proceedings this additional language makes no difference in the analysis of whether Aman stated the "amount of the debt" as required by § 1692g(a)(1).
III. Discussion
Mr. Jackson claims that Aman did not state the "amount of the debt" in its collection letter because it included the phrase "Plus Accruing Interest". Aman moves to dismiss the Complaint, contending that it did state the amount of the debt. Aman argues that the phrase "Plus Accruing Interest" refers only to interest which may accumulate after the date of the letter and is not part of the "amount of the debt" that must be disclosed. Plaintiff opposes the motion and, in his response brief, articulates two new theories in support of his claim that Aman has violated § 1692g(a)(1): (1) He argues that the letter fails to state clearly that the amount it claims is due is the amount due as of the date of the letter as required by Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000); and (2) He argues that the letter fails to comply with the "safe harbor" formula set forth in Miller. In deciding whether the Complaint states a claim against Aman, the court considers these theories in addition to that asserted in the Complaint. See Hayes v. Whitman, 264 F.3d 1017, 1025 (10th Cir. 2001) ("it might be appropriate for a court to consider additional facts or legal theories asserted in a response brief to a motion to dismiss if they were consistent with the facts and theories advanced in the complaint.").
The Seventh Circuit determines whether a communication violates § 1692g's notice requirements from the perspective of the "unsophisticated consumer." See Pettit v. Retrieval Masters Creditors Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir. 2000); Avila v. Rubin, 84 F.3d 222, 226 (7th Cir. 1996); Gammon v. GC Servs. Ltd., 27 F.3d 1254, 1257 (7th Cir. 1994). As the court said in Avila: "the standard is low, close to the bottom of the sophistication meter." 84 F.3d at 226. The "unsophisticated consumer" is "uninformed, naive, or trusting." Pettit, 211 F.3d at 1060; Gammon, 27 F.3d at 1257. There is, however, an objective element of reasonableness in the standard which protects debt collectors from liability for "unrealistic or peculiar interpretations of collection letters." Gammon, 27 F.3d at 1257.
The Seventh Circuit in Miller addressed § 1692g(a)(1)'s requirement that the debt collector state "the amount of the debt" in its notice of debt. The debt collector in that case sent the debtor a letter that stated the "unpaid principal balance" of the loan was $178,844.65 and indicated that "this amount does not include accrued but unpaid interest, unpaid late charges, escrow advances or other charges for preservation and protection of the lender's interest in the property, as authorized by your loan agreement.
The amount to reinstate or pay off your loan changes daily. You may call our office for complete reinstatement and payoff figures." Id. at 875. The letter gave an 800 number. Id. The court easily concluded that the letter violated the requirements of § 1692g(a)(1): "The statement does not comply with the Act. . . . The unpaid principal balance is not the debt; it is only a part of the debt; the Act requires statement of the debt." Id. The court also wrote that the FDCPA required the debt collector "to state the total amount due-interest and other charges as well as principal-on the date the dunning letter was sent." Id. at 875-76. The court carved a "safe harbor" formula for complying with the "amount of debt" requirement, holding that the following statement satisfies the debt collector's duty to state the amount of the debt where the amount varies from day to day:
As of the date of this letter, you owe $ [the exact amount due]. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you before depositing the check for collection. For further information, write the undersigned or call 1-800-[phone number].
Id. at 876. The court explained, however, that a debt collector need not use this precise language in order to discharge its duty under the FDCPA to "state clearly the amount due." Id. Thus, Miller holds that § 1692g(a)(1)'s requirement that a debt collector state the amount of the debt is satisfied if a debt collector's notice clearly states the total amount due.
At this stage of the proceedings, the court cannot find that Mr. Jackson has failed to state a claim against Aman for violating its duty to state the "amount of the debt" as required by § 1692g(a)(1). As Mr. Jackson asserts, Aman's collection letter does not expressly state that the "TOTAL DUE" is the amount due as of the date of the letter.
The safe harbor formula fashioned in Miller does contain such an express statement, and use of the safe harbor formula will as a matter of law comply with § 1692g(a)(1)'s requirement to state the amount of the debt. Miller noted that it "do[es] not hold that a debt collector must use this [safe harbor formula] to avoid violating the statute," id. at 876 (emphasis in original); however, in this instance it is unclear whether the "TOTAL DUE" is the amount due as of the date of the letter. That the "TOTAL DUE" is the amount due as of the date of the letter may be implicit to some readers, but the FDCPA and the unsophisticated consumer standard allow proof that readers at such a low level would not draw the inference that the amount due is pegged to the same date as the letter. This furthers the FDCPA's purpose of protecting consumers from "abusive, deceptive, and unfair debt collection practices," Bass v. Stolper, Koritzinsky, Brewster Neider, S.C., 111 F.3d 1322, 1324 (7th Cir. 1997).
Even assuming that the "TOTAL DUE" is the amount due as of the date of Aman's collection letter, it is unclear whether that date is the date the letter was drafted, sent, or to be received. Miller may be fairly read as requiring that the total amount of the debt be stated as the total amount due on the date a collection letter is sent. Miller, 214 F.3d at 875-76 ("What they certainly could do was to state the total amount due . . . on the date the dunning letter was sent. We think the statute required this."). The date on the letter and the date the letter was sent are not necessarily the same date. The Complaint contains no allegation as to the date on which Aman's letter was sent to Mr. Jackson. Therefore, at this stage of the proceeding, it has not been established that the "TOTAL DUE" of $463.47 was the total amount due on the date Aman's letter was sent to Mr. Jackson. The court can conceive of facts, consistent with the Complaint's allegations, which would establish that the date of the letter and the date the letter was sent do not coincide. For example, the letter may have been drafted on August 29, 2000, but not actually mailed to Mr. Jackson until a few days later.
Section 1692g(a)(1) does not explicitly require that the amount of the debt be stated as of the date of the issuance of a dunning letter. Perhaps the language in Miller indicating that the statement of the amount due must be as of the date of the letter was dictum, and a statement of the amount due as of a specified earlier or subsequent date would also comply with the statute. Nonetheless, such specificity was not present in the facts before the court in Miller, nor is such specificity present in the letter attached to the Complaint in this case.
Moreover, the precise meaning of the phrase "PLUS ACCRUING INTEREST" as used in Aman's letter may be unclear. Aman argues that "accruing interest" was not part of the amount due on the date of the letter and thus is not part of the "amount of the debt" required to be stated under § 1692g(a)(1). Aman argues that "accruing interest" can only mean interest due in the future. But that is not the only reasonable understanding the unsophisticated consumer may have of the phrase "accruing interest" as used in Aman's letter. Neither § 1692g(a)(1) nor Miller expressly requires a debt collector to state the date to which interest has accrued or the date from which interest is accruing. However, as stated, Miller does require that the debt collector "state clearly the amount due." Miller, 214 F.3d at 876. The absence in Aman's letter of a statement of the date from which interest is accruing leaves to proof whether the phrase "plus accruing interest" means interest accruing from the date of the letter, as Aman suggests, interest accruing from the date the letter was sent, or interest accruing on the principal debt owed. If the last, it would include both interest that had accrued before the date of the letter and interest accruing at some future time. The letter would, therefore, suffer from the same inadequacies as the notices in Miller, Bawa v. Bowman, Heintz, Boscia Vacian, No. IP00-1319-C-M/S, 2001 WL 618966, at *3 (S.D.Ind. May 30, 2001), and Wilkerson v. Bowman, 200 F.R.D. 605, 606-07 (N.D.Ill. 2001), which failed to provide an exact amount for accrued interest.
In addition, as the Seventh Circuit held in Johnson v. Revenue Management Corp., 169 F.3d 1057, 1060 (7th Cir. 1999), and reaffirmed in Walker v. National Recovery, Inc., 200 F.3d 500, 501-03 (7th Cir. 1999), whether a collection notice is confusing to an unsophisticated consumer is a question of fact. In both cases, the Seventh Circuit reversed the district court's dismissal for failure to state a claim of a complaint alleging that a particular notice confused recipients because, inter alia, "district judges are not good proxies for the `unsophisticated consumers' whose interests the [FDCPA] protects." Walker, 200 F.3d at 501 (quoting Johnson, 169 F.3d at 1060). The Seventh Circuit explained: "To learn how an unsophisticated reader reacts to a letter, the judge may need to receive evidence." The court added that "a complaint that presents a claim turning on factual issues and inferences . . . may not be terminated under Rule 12(b)(6)." Walker, 200 F.3d at 503. So it is with the Complaint in the instant case. The letter does not state that the total due is $463.47 "plus accruing future interest" or "plus accruing interest in the future" or "plus interest that will accrue". It could not be disputed that any of these phrases would convey to the unsophisticated consumer that the "TOTAL DUE" may include interest accrued to the date of the letter but does not include future interest. Without such clarifying language, as Mr. Jackson suggests, proof may be adduced that an unsophisticated consumer cannot determine from the letter the date from which the unstated amount of interest is accruing. Even assuming that the letter implies that interest is accruing from the date of the letter, as urged by Aman, the court can conceive of facts that would show that the unsophisticated consumer needs a less subtle notice, in furtherance of the FDCPA's purpose of protecting consumers from "abusive, deceptive, and unfair debt collection practices," Bass, 111 F.3d at 1324. Aman cites to Chaudhry v. Gallerizzo, 174 F.3d 394 (4th Cir. 1999), for support for its position that Mr. Jackson has failed to state a claim. There, the court affirmed the district court's decision that attorney's fees which were not due and payable at the time the collection notices were sent were not part of "the amount of the debt" for which disclosure was required under § 1692g(a)(1). Id. at 405. Chaudry is inapposite because here it is less than clear that the "interest accruing" was not due and payable as of the date of the letter. As stated, Miller requires that a debt collector clearly state the amount due.
"Accruing" in the phrase "plus accruing interest" is a present participle modifying "interest". Thus, "accruing" describes a present condition. See, e.g., Guide to Grammar and Writing, at http://webster.commnet.edu/grammar/verbs.htm#participles (last visited December 10, 2001). Interest that is accruing as of a point in time may be understood also to have been accruing prior to that time. To the extent that Aman offers support for its position that "accruing interest" refers only to interest which becomes due in the future (see Aman Collection Service Corp.'s Mem. Supp. Rule 12(b)(6) Mot. Dismiss Pl.'s Compl. at 4 (citing Black's Law Dictionary 14 (6th ed. 1991)), there appears to be disagreement among authorities. Of course, Aman's letter is viewed not from the perspective of a grammarian or some other language expert, but from the perspective of the unsophisticated consumer.
At this stage of the proceedings where the factual allegations in the Complaint are accepted as true and viewed in the light most favorable to Mr. Jackson and reasonable inferences are drawn in his favor, the court cannot conclude that he can prove no set of facts entitling him to relief on his claim that Aman failed to state the "amount of the debt" as required by § 1692g(a)(1). Accordingly, Aman's motion to dismiss for failure to state a claim must be DENIED.
IV. Conclusion
The court finds that the Complaint has alleged facts sufficient to state a claim against Aman for failure to state the amount of the debt under 15 U.S.C. § 1692g(a)(1).
Therefore, Aman's motion to dismiss is DENIED.
Aman is reminded that it has sixty days within which to respond to Plaintiff's motion for class certification.
ALL OF WHICH IS ORDERED this 14th day of December 2001.